Vegetables peak in Nogales, but cloud follows tomatoes

As grower-shippers head into peak volume months in Nogales, Ariz., most expect supplies of Mexican vegetables and fruits to rebound quickly from mid-January freezes. But politics and market forces are casting a shadow over the biggest crop crossing the border there — tomatoes.

A few commodities, such as watermelons, may see shortages deep into March. The uncertainty over tomatoes will linger past spring, though.

For one, increases in floor prices of 10 to 20 cents per pound would become typical under draft revisions to the U.S. suspension agreement with Mexico.

The agreement, to be finalized by March 4, is widely opposed in Nogales.

About $1 billion worth of tomatoes crosses the border in Nogales annually.

“If you saw even a 10% or 20% decline, that’s a lot of money,” said Lance Jungmeyer, president of Fresh Produce Association of the Americas.

Less than a year ago, Arizona’s fresh produce industry was swimming in tomatoes. Oversupply seems unlikely to return soon — and politics is not the only reason.

Demand in Mexico has shown signs of strengthening, and export licensing requirements there have toughened. Some importers also see a temporary dip in U.S. demand.

“To keep profits in the produce department, it’s my opinion they’re taking the tomatoes, peppers and things we have in good supply and applying the markup there. It’s a 100% to 200% return on investment to make up for what they’re not making on high-priced leafy items, it would appear.”

He referred to a rise in lettuce costs following shortages in Arizona and California.

Bulk of crops still to come

Chris Ciruli, partner in Nogales-based Ciruli Bros. LLC, said the freezes that hit northern Mexico in the second week of January will just bring volume on later.

“People think we’ve already had a winter crop, but around 75% of our crop is still to come off in February, March and April,” Ciruli said Jan. 28.

“There’s a tremendous amount of vegetable volume. We’re running in peak season on tomatoes, green and red peppers, eggplant and cucumbers now,” he said.